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Any means of avoiding home loan EMI starting till possession?
asked Sep 10, 2017 in Home Loan by Pankaj Mallik (26 points) | 58 views

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@Pankaj , banks do allow loan holiday to the extent that you pay interest EMI but not EMI on principal for a certain duration. As you know, EMI that you pay has an interest component and a principal component. In the first few years, you will pay more as interest payment and less as principal payment.
For example, suppose you take a 50L home loan at 8.5% interest for a 10 year duration, you will repay a total of 50L principal and 24.39L interest over the 10 year duration.
In the first year, you will pay 4.12L as interest and 3.3L as principal. When the bank allows a EMI holiday, what it means is that you will need to pay Rs. 4.12L interest only in the first year, but you will start paying the principal after the EMI holiday (usually between 12 to 24 months ends).
Only problem in this is that because you are paying principal later, your loan tenure increases! It is like borrowing from tomorrow to eat today ;)
answered Sep 13, 2017 by Simon S (20 points)
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